NIGERIA – United African Company of Nigeria is in the advanced stages of selling its 51% stake in its real estate subsidiary- UACN Property Development Company Plc – to Custodian Investment Plc.
A statement from the company’s board of directors revealed that the company has already signed a binding agreement with Custodian Investment Plc for the intended sale of the real estate subsidiary.
The agreement, according to statement from UACN, marks the beginning of a partnership between Custodian and UAC that will achieve both companies’ respective objectives in the real estate industry.
Under the binding agreement, UCN will dispose its share in in two tranches: the initial one will feature the offloading of 5.10 per cent of the issued share capital of UPDC.
The sale according to UCN, will be followed by a subsequent sale of 45.90 per cent of the issued share capital of UPDC upon receipt of requisite approvals.
UCN further noted that completion of the sale is subject to regulatory approvals from the Nigerian Stock Exchange and the Federal Competition and Consumer Protection Commission.
UPDC is one of Nigeria’s leading real estate development companies, having completed several landmark residential and commercial developments over the past twenty years.
In 2018, the Board and management of UAC embarked on a strategic review to evaluate the performance of the company and its subsidiaries.
“The objective was to achieve sustainable positive financial performance from our existing operations and enable management focus on businesses that align with our strategy,” Aiyesimoju explained.
Aiyesimoju further revealed that following an internal review, UACN’s board concluded that it would be in the best interest of UACN to exit its interest in the real estate sector.
This according to Aiyesimoju, will allow UPDC to operate as a standalone legal entity, free to source appropriately structured capital and to unlock value for its shareholders.
In September 2019, the Boards of Directors of UAC and UPDC jointly announced three significant strategic initiatives aimed at strengthening UPDC and positioning the company to operate as a standalone entity.
This included a rights issue to recapitalise the business, plans for UAC to transfer UAC’s equity interest in UPDC pro-rata to UAC’s shareholders, and plans for UPDC to unbundle the UPDC REIT to its shareholders.
The US$41.55 million UPDC rights issue was successfully completed in April 2020, proceeds of which were used to reduce borrowing costs and significantly improve UPDC’s capital position.
In the process of progressing the unbundling initiatives, UAC received a credible offer from Custodian which has culminated in the binding offer for the sale of the 51% stake.
The sale comes at a time when UAC Nigeria Plc has reported a 55.21 per cent decline in its profit after tax for the half year ended June 30, 2020.
The company’s unaudited results filed with the Nigerian Stock Exchange showed that its profit after tax during the period under review dropped to US$3 million from US$6.68 million in the same period of 2019.
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